Citigroup: Expect Gold To Fall Below $1,250 Again This Year

By Brendan Conway

The pair’s latest commodity strategy note calls for the price of gold to get back under $1,250 per ounce by the end of the year — a roughly 6% drop from Monday levels. That, the pair argue, would be a result of stronger economic data and a resurgence of focus on the Federal Reserve “taper.”

Associated Press

From a note to clients making the rounds on Monday:

Our expectation is that the postponement of the tapering decision by the FOMC represents only a short-term reprieve for gold. US unemployment continues to grind closer to the Fed target level, with the current reading at 7.3%, although concerns remain that labor force participation is weak and the Fed has indicated ongoing support for low rates at the front-end for the next several years. The next FOMC meeting is set to be on October 29-30 followed by another gathering on the 17th/18th of December. While some market participants anticipate any tapering announcement to only arrive in December at the earliest, Chairman Bernanke was clear to suggest no pre-set time-table and that a major policy change could be made at ‘any meeting.’ This now leaves the market to focus on the continued, albeit gently improving macro economic environment, key data releases particularly as related to employment and outperforming equity markets on the one hand, and the upcoming US budget ceiling squabble on the on other.

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There are 9 comments

SEPTEMBER 23, 2013 2:04 P.M.

Martn a wrote:

Why if the economy is strong and going to be stronger did the Fed punt on Taper of 85 billion /month.
If a material is finite and printing money has been infinite explain why gold and other commodities are going
to decline this truly portrays a negative or deflationary picture.It would be better for all if gold rises in price.

SEPTEMBER 23, 2013 4:24 P.M.

JS wrote:

One Citigroup new this was a fact, the everyone would buy DUST and become rich

SEPTEMBER 23, 2013 4:31 P.M.

Stay away from Cramer wrote:

These ETFS are a joke I own NUGT and am fed up, the majority of the time when gold goes up it goes up now it is headed down.

SEPTEMBER 23, 2013 4:58 P.M.

eddy112 wrote:

All the FED can do is Talk, Talk Talk. they will not start tapering until the Federal budget deficit is dropping. the entire reason for the QE program is to fund the Federal Deficit. It is now coincidence that both are about the same size. The start of tapering will always be next month or next year or whatever. When the time comes, they will not do it.

It is amazing that everyone focuses on gold as the asset most at risk from tapering. I think the stock market is far more at risk and if it falls, more investors will suffer. Much fewer investors own gold, and it has been beaten to a pulp. It seems like this column likes to whip up negative sentiment about gold continuously.

In the end a 6 percent decline isn't much. Even for the likes of JPM and Citibank who can leverage it three to one. A six percent decline is not going to shake out a serious gold investor - especially, if they have held on all along. If they really want to be scary, then predict a decline to $400/oz or $5/oz silver.

At the end of the day, I'm pretty sure JPM and the bullion banks can sell enough paper gold at 3 in the morning to get the price down 6 percent - actually wherever they want to get it. It is interesting to me that they are announcing it before they do it?? Maybe they have plans to drive the price way up by the end of the year and need to shake some easy ounces out of you right now? After all JPM has gone from a net short position of 75,000 contracts of gold to a net long position of 75,000 contracts - just this summer.

SEPTEMBER 23, 2013 6:27 P.M.

Keepitreal wrote:

Listen to 'eddy112' it is the truh. Also Goldman Sachs loaded up on GLD shares prior to the June 30th Institutional filings.

SEPTEMBER 24, 2013 6:42 P.M.

dave wrote:

NUGT has been a very poor performer for years. Even as the price of gold was stable, this etf sold off. Some of the gold mining companies are as cheap as they were in the 1990s or 1980s. Eventually, I have faith that the oposite will be true. At various times, I have been long NUGT or long DUST, but after two years of declines, I would think this should turn around. It is hard to imaging why a fund manager would but DOW stocks at this point, but not buy gold or gold miners. However this seems to be the trend. This time, I think they are on the wrong side of the trade.

SEPTEMBER 29, 2013 4:09 P.M.

the opposite wrote:

a range of 1250 to 1430 will be true

OCTOBER 9, 2013 10:31 A.M.

Boob Boff wrote:

I bought DUST today... no win for gold this year or next year... price target 80 for DUST... right now its 41.67 9-9-13

OCTOBER 9, 2013 10:33 A.M.

Ron Jeremy wrote:

I bought my first pinky ring when gold was about $400 an ounce 18 years ago... the price of gold will keep coming down.... Miners will go bankrupt or they will sell off.... IMMEDIATE DOOM AHEAD FOR GOLD.

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